The tool attempted to modify the original input dataset and failed. This may be because the data format is a noneditable format. For instance, running Add Field on an SDC feature class will create this error. Another situation that may trigger this error is when editing a dataset in one ArcMap data frame and running a tool that modifies the schema of a dataset found in a different data frame.
If performing operations on the data is desired, convert the data to an editable format, such as geodatabase or shapefile.